SPX, INDU, BKX: INDU Chart FTW

Last update discussed how INDU's chart implied the market was still going to head higher one way or another, and that proved to be decisive:

BKX still hasn't sustained a breakout over 109 (it's over 109, but this breakout has not been tested yet), but it's close:

That's relevant because it would imply a bull nest in BKX, which would likewise need to see SPX rally more considerably:

In conclusion, the read of the INDU chart last update proved to be correct, now bulls are just trying to decide "how high?"  By all indications, they have plenty of room to run if they so choose.  Trade safe.

SPX, INDU, BKX: INDU May Offer Clues

There isn't a ton to add to the prior update, but there is one notable chart development since then, in INDU, which has already rallied back above its November high:

BKX has retested its high, but not cleared it yet:

SPX indeed found support at the noted zone:

And no change to the big picture:

In conclusion, not a lot to add to the prior update, except to note that INDU has made new highs for November, which implies it still needs more upside one way or another -- which in turn suggests that SPX and BKX may ultimately (see potential paths again) reclaim their November highs as well.  Trade safe.

SPX and BKX: Bimodal Market

Here's my conundrum:  A couple weeks ago (and since), I published several updates urging bears to be cautious (though I ended those on November 2).  The market then rallied until the Fed announcement, leaving me to wonder if that satisfied the near-term bullish instinct I had a couple weeks ago.  But also leaving the charts in a state of near-term flux.  This means I can't refer to the charts and say, "Oh, hey, this is clearly near-term bullish, so..." And neither can I say the opposite.  The charts are essentially silent here (only on the near-term; the long-term is bearish), except in the sense that they're pretty bimodal:  We're likely either setting up for a decent bear market rally, or for a significant decline.

But here's my real problem:  My gut still says the market wants to rally some more, but I can't find much in the charts to justify that, and I have to present the charts as I find them.  Part of trading and analysis is learning to sort out what's "personal feeling" from objective reality.  The objective reality is that the charts are simply bimodal.  My personal feeling is that the market wants to rally some more.  The charts have to trump feeling, though.

This is also why I've stated several times that I'm open to whatever the market wants to do here -- because I am, as I don't value subjective reality above objective reality.  But I wanted to at least attempt to clarify what I'm feeling, for whatever it's worth.  With that out of the way, let's get to the charts.

Near-term, SPX is still above recent support:

BKX may offer an early warning to the broad market, in the event it were to sustain a breakout.  If it does not sustain a breakout, then that last rally was a simple ABC corrective wave:

Big picture remains unchanged, but I've added a reference to BKX:

In conclusion, the charts remain bimodal heading into Election Day, at least for the near-term.  The long-term remains bearish, since even an election outcome that might put DC into gridlock (gridlock is historically bullish for the economy -- strongly implying that the best thing for America almost always involves our government doing nothing) won't go back into the past to rewrite all the damage that has already been done.  Trade safe.

SPX Update: Inflection Zone Confirmed, But Options Remain

Last update expected that 3911 was an important inflection zone, and that the market would head lower, either in gray wave 4 or in the start of a new bear move.  The market then headed significantly lower, as Powell basically said he's going to keep breaking things until morale improves, and then promised to go to fisticuffs with anyone who doubts his resolve.

Investor psychology is now pretty bearish, because the market is slow and stupid and is just now finally getting the picture.  As I wrote back in May (yes, I'm probably going to refer to that piece again in the future), in Not Even the End of the Beginning:

[I]t seems the Fed only reaches its goals by continuing to feed volatility and destroying wealth until the economy is in recession. Thus, the Fed is not going to reverse course when the economy starts to struggle (unless inflation has abated), because they currently view a struggling economy as necessary to tame inflation. And the Fed won't bail the market out as it heads lower, because the Fed wants the market lower.

Now, with that out of the way... it's worth being aware that the market often likes to mess with the majority, and there are a lot of "newly-minted" bears after Powell's speech:

Big picture, I decided to try to simplify things as much as possible, for clarity:

Near-term, there may still be some value in the SPX trend line chart:

In conclusion, the big picture remains exceedingly bearish, but the market still has options near term, and blue 2 or red 2 (2nd chart) are still on the table and would be a lot of fun here, as it would really throw a lot of new bears off the trail.  Also, I should add that in the event we are already in blue 3 of red 3, then, in that case, 3 of 3 is usually a crash wave, so be aware of that.  Trade safe.

SPX Update: All the Marbles

Last update concluded:

[I]n conclusion, we are at (3/c could have completed on Friday, though it would look a little better with a bit more upside first) or approaching a bear inflection zone, and it's going to be tricky, because even the bull count would likely correct lower from that inflection (in gray 4? on the second chart), so both counts will seem up in the air for a time. 

Since then, we indeed got "a little bit more upside," and then "corrected[ed] lower from that" 3/c inflection.  If you're a new trader, you'll have a lot of people tell you that calling for a little bit more upside followed by a turn -- and then having the market play out exactly that way -- isn't something you're "supposed" to be able to do.  But here we are anyway, at the inflection, with things seeming "up in the air," and now the market does have options again (all week, I've said it's pointed higher -- that is finally not baked in anymore).

Bigger picture, we all need to be aware that in the event that inflection zone was the end, things can get extremely bearish from here:

In conclusion, this inflection zone is quite possibly playing for all the marbles for the immediate future.  I would still prefer to see a bit larger bounce here (after gray 4 completes), but I can't draw that from the charts, because we do have three waves up and three up can end a corrective bounce (gray 4 only exists if the rally wants to become 5 waves up instead of 3) -- so the market has the option to go either way now, my own personal preferences notwithstanding.  Trade safe.

SPX Update: "Not a Fourth Wave" Confirmed

On 10/24, in an update titled More Cause for Bear Caution, I wrote multiple times that the rally didn't "feel" like a low degree fourth wave to me, implying that it was going to head more than a little bit higher, and that has since been confirmed.

I also wrote:  "Big picture, presently I'm slightly leaning toward this either being the Big C wave that we've discussed a million times, or a nested 2nd wave," and presented the following chart, with the nested 2nd and the Big C wave terminuses shown in red and blue respectively:

Here's that same chart with the updated price action now:

SPX has gotten a lot closer to Red 2, but it's still not there yet, obviously.  So that's the bull case, and it's the way I'm still slightly leaning -- but let's take a quick look at the bear case, which we'll discuss after the chart:

The bear case says that we've about completed 3 waves up (gray 3/c), and because three waves can complete a corrective move, it is indeed always possible for any structure to terminate at such an inflection.  If we refer back to the first chart, we can also see that SPX is backtesting the lower rising black trend line -- so I'm not entirely closed to the idea that maybe this will be it for the bounce.  I'm very much open to it, I'm just not presently leaning that way, as I wrote on the 24th.

So, in conclusion, we are at (3/c could have completed on Friday, though it would look a little better with a bit more upside first) or approaching a bear inflection zone, and it's going to be tricky, because even the bull count would likely correct lower from that inflection (in gray 4? on the second chart), so both counts will seem up in the air for a time.  That said, I'm still slightly inclined to think bulls get more rally after that correction, but as I said, I'm very much open-minded to the bear potential, so when that correction occurs, I'll mark the zones to watch.  Trade safe.

SPX and TLT: Last Monday's Update Absolutely Nailed TLT

Last update noted that COMPQ had reached intermediate resistance and that SPX had captured its next upside target, and that this could generate a reaction, which would most likely be a fourth wave.  We've had the anticipated reaction, now we find out if it is indeed a fourth wave.  No change to the chart below (the annotation is from 10/26), but I did add a bit more detail to the (seemingly most likely) micro wave count.  Note that gray iv has some room to play around a bit if it wants:

Next, let's take a look at Monday's if/then price projection, which has played out pretty well so far:

Also, let's revisit COMPQ, which is probably responsible for the market's hesitation here:

The caveat regarding the potential micro fourth wave and how it contrasts with COMPQ is that this is intermediate resistance, so as I warned in the last update, bulls probably shouldn't get complacent just yet.  

And last, a quick follow up:  On Monday, for TLT, I issued the first warning I've given to bears in a long time, writing:

Finally, TLT is firmly into its target zone now, so I'm going to give my first warning for "bear caution" since I published this target back in April. As of yet, there's nothing even vaguely bullish in the chart, but my gut has started saying: "be careful, bears" -- for whatever that's worth.

That turned out to be the exact bottom, and TLT proceeded to launch the largest bounce it's had in 3 months (so far):

In conclusion, by all rights, SPX probably does still need another wave up, but we still have to remain cognizant that this is an intermediate resistance zone, because off-beat patterns do show up every now and then to keep us on our toes.  As long as SPX holds above 3762, nothing gets too complicated yet.  Trade safe.